nmr12354
Level 3

Client received his first social security disability check in 2018 for several back years. In addition, client took $8k out of his Roth account in 2018. Tax program generated a 10% penalty because the 1099-R had a "J" distribution code. Client had no taxable income. Does the client have to pay the penalty,  since he is disabled. ? Client is 48 years old

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sjrcpa
Level 15
Did you enter the basis of the Roth IRA? Penalty is only applicable to the taxable portion.

Ex-AllStar
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Skylane
Level 11
Level 11

agree w/ sjrcpa. after you do what she said, take a look at form 5329 and instructions for the penalty exclusion.

If at first you don’t succeed…..find a workaround

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